Australia & New Zealand Banking Group Ltd. will conduct an on-market buyback program to repurchase up to A$1.5 billion of shares after completing the sale of its 20% stake in China-based Shanghai Rural Commercial Bank Co. Ltd.
The share repurchase, which is part of the group's broader capital management plan, is likely to commence in January 2018, subject to market conditions.
ANZ said it has already purchased about A$500 million of shares on-market to offset the effect of the dividend reinvestment program for the interim and final 2017 dividends, as well as the impact from the lender's share-based employee compensation plans.
Further, ANZ closed the sale of its entire stake in Shanghai Rural Commercial Bank to China COSCO Shipping Corp. Ltd. and Baoshan Iron & Steel Co. Ltd., with each buyer taking 10%.
The group said its common equity Tier 1 capital ratios as of Sept. 30 will remain unchanged on a pro forma basis, with an increase of 40 basis points from the stake sale offsetting the impact of the share buyback.
ANZ added that it expects the divestment of its noncore businesses, including the sale of its life insurance business announced in the week of Dec. 11, to provide it with "flexibility to consider further capital management initiatives in the future."